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Continued from page 2

We have to judge government's exercise of control over people in actuality, not just in theory. It is notable that there is no face to government failure in Detroit. Detroit did not go the way of the buggy whip factory. It went the way of the nameless tax-and-spend bureaucrat.

Among the 50 largest cities in the United States, Detroit has the highest property taxes. The city has a home property tax of 3.3%, a commercial property tax of 4.1% and an apartment property tax of 4.2%. Residents pay as much to the city as they pay interest on their mortgages.

Detroit has a corporate income tax of 2% and a personal income tax of 2.4%. A small corporation with as little as $1 million in revenue would owe Detroit an extra $20,000, pay an extra $24,000 personally or perhaps even both. Detroit even taxes nonresidents who work within the city. These are city income taxes piled on top of the Michigan state income tax rate of 5%. No wonder businesses were leaving Detroit.

The schools in Detroit are some of the worst in the country. The National Institute for Literacy estimates that 47% of people living in the city are functionally illiterate. Half of the illiterate population has a high school diploma, and virtually all of them have completed elementary school where reading is purportedly taught.

Poor families are hurt the worst. They are trapped in failing school systems that waste money through fraud and mismanagement. Forget about the separation of church and state; we need a separation of school and state.

Liberal commentators have called for the federal government to pay Detroit's debts. However, bailing out Detroit is at least as bad an idea as bailing out the auto industry or the banking industry, because the government can't really bail out anyone. All it can do is transfer the burdensome debt from one group of taxpayers to a different group of taxpayers.

Most of Detroit's problems have stemmed from promising larger public employee pensions than can actually be funded. All politicians have the incentive to make promises they have no intention of keeping, and corruption follows the power of redistribution.

Second, the state's constitutional assurances for the safety of government pensions are illusory. It would have been much better for Detroit government union members to have owned their own retirement accounts rather than to trust the paper barrier that was protecting their pensions.

And finally, government cannot rely on the ever-increasing expansion of private sector tax revenue to overcome government waste, fraud and corruption. Deficit spending is just as bad for governments as it is for individuals. The harmful effects of deficit spending burdening the society are worse than any potentially positive benefits.